Severe backwardation: prices of WTI to be going down going forward.
Now this from oilprice today.
Those hedges were likely secured last year, when oil traded at lower levels. The shale companies locked in those positions as a risk management strategy, guarding against the possibility of a meltdown in prices. If the economy had crashed or OPEC decided to flood the market once again for some reason, and oil prices fell back below $50 per barrel this year, those companies would have been protected.
As it happened, however, prices surged in the first half of this year.
WTI surpassed $70 per barrel in the second quarter, rising to its highest point in more than three years.
Some shale drillers were stuck selling their oil for prices in the mid-$50s. Anadarko said that it missed out on nearly $300 million in pre-tax revenue because it was locked into hedges.